Crypto: Start Safely

Before anything else

This is education, not advice. It is not financial, investment, tax or legal advice, and nothing here is a recommendation to buy, sell or hold anything. Crypto is highly risky and you can lose everything you put in. Do your own research and speak to a qualified adviser before making decisions.

The ten-second check

If you read nothing else, read this. Eight questions, immediately before you press buy. If any answer is no, pause.

Ask yourself, right now

Do I understand what I am buying? Have I researched it beyond social media? Could I afford to lose this money entirely? Have I checked every fee? Is my account secure? Do I know where the asset will be stored? Do I know how I would sell it? Am I making this decision calmly?

The rest of this page is the long version of those eight questions. Where something needs a proper explanation rather than a tick, it links across to how buying crypto actually works instead of repeating it here.

Can you explain what you are considering?

The test is simple. Could you explain it to someone else, out loud, without using a word you would struggle to define? If not, that is not a reason to give up. It is a reason to wait.

I can say what cryptocurrency and blockchain mean. The plain English version I know why this particular asset exists. What problem was it built to solve? I understand what gives it value. I know why its price can move so violently. What actually drives prices I know the difference between a coin, a token and a stablecoin. The types, and what each is for I understand that owning a token is not owning part of a company. No shareholding, no dividend, no vote in most cases, and no claim on anything if it fails.

Is this right for you?

This is the section people skip, and the one that matters most. It has nothing to do with crypto and everything to do with your circumstances.

I could lose the entire amount without it changing my life. Not "it would sting". Genuinely without consequence. This money is not needed for bills, debt or emergencies. Paying down expensive debt is a guaranteed return. This is not. I am buying because I understand it, not because the price is rising. Be honest. Rising prices are the most common reason people buy, and the worst one. I could watch it fall by half without panicking. This has happened repeatedly, to every major asset in the sector. I understand how I will store it and eventually sell it. I have checked the tax and regulatory position where I live. It differs by country, and Jersey and the UK are not the same.

One line to remember

Nothing here offers guaranteed returns. Anyone suggesting otherwise is either mistaken or lying to you, and the second is more likely.

Researching what you are buying

Price predictions and social media posts are not research. These are the questions worth being able to answer.

Warning signs

Stop and investigate if you see any of these. There is a fuller explanation of how these work in spotting a scam.

Guaranteed or suspiciously consistent returns. Pressure to act immediately. Anonymous people asking for money. Celebrity endorsements you cannot verify. Claims that the risk does not exist. Returns that depend on recruiting other people. Any request for your password, security code or seed phrase. Theft, every time, without exception. A project that cannot explain what its token is for.

Where you would buy it

There are four broad routes, and they differ enormously in how much control you have. They are set out properly in the four ways in, with the questions to ask of any platform in judging a platform. The short version:

I know which of the four routes I am using and why. Exchange, simple broker app, a fund through an ordinary investment platform, or holding it myself. I have checked what its registration actually covers. Usually anti-money-laundering only. It rarely means your money is protected. I know who holds the asset and what happens if the firm fails. I have compared deposit, trading and withdrawal fees. I have confirmed I can withdraw both cash and the asset itself. Some platforms do not allow the second at all. I know how to reach a human if something goes wrong.

For the avoidance of doubt

This site recommends no platform, names none, and receives no affiliate or referral payment from anyone. See where I stand.

Your first purchase, step by step

A worked example rather than an instruction. Imagine someone buying £50 of a cryptocurrency for the first time. This is the order that keeps them out of trouble.

1. Research the asset and understand the risks. Everything above this section. 2. Choose a route and complete the identity checks. Expect them to be thorough. A platform that does not ask is being careless, not helpful. 3. Secure the account with a unique password and two-factor authentication. Before depositing anything, not after. 4. Deposit the £50 and check the deposit fee. 5. Compare a market order with a limit order. A market order trades at the best price available now. A limit order sets the price you will accept, but may never complete. 6. Check the trading fee and what you will actually receive. The gap between those two numbers is the real cost. See what it really costs. 7. If withdrawing, confirm the wallet address and the blockchain network. Right address, wrong network, and it is gone. 8. Send a small test amount first. Always. Every time. However confident you feel. 9. Save a record of the purchase, the fees and the date.

Security

The mechanics of why these matter are in custody and keys. This is the list itself.

Always

Use a unique password, used nowhere else. Turn on two-factor authentication. Bookmark the genuine website and use the bookmark. Search results carry fake adverts. Check addresses character by character. Verify the blockchain network before sending. Send a small test transaction first. Keep devices and software updated. Treat any unsolicited support message as hostile.

Never

Share your seed phrase with anyone, for any reason. Store a seed phrase in an email, a message or a notes app. Let anyone see or control your screen. Follow wallet instructions from someone who contacted you. Approve a transaction you do not understand. Act because someone has created urgency or fear.

The one absolute rule

A genuine support representative will never need your seed phrase. Not to verify you, not to fix a problem, not to release funds. Anyone asking is stealing from you.

Planning how you get out

Almost nobody does this, and it is the clearest thing separating investing from gambling. Decide before you buy, while you are calm.

I know what would make me sell. A price, a change in the project, a change in my circumstances. Any of those, but decided in advance. I have decided whether to take profits gradually or all at once. I know how the money gets back to my bank. I know the selling and withdrawal fees. I understand withdrawals can be delayed by extra checks. I know what records I will need for tax.

Worth sitting with

A profit on a screen is not a profit. It is unrealised until the asset is sold and the money has arrived. Prices can change a great deal between those two moments.

What to record

From the very first transaction, not from the point it becomes a problem. See tax for why.

Purchase and sale dates. Amounts and prices. Trading, withdrawal and network fees. Transfers between wallets. Rewards, staking income and anything else received. Which platforms and wallets were used.

Keeping up

This sector changes quickly, and a decision that made sense a year ago may not now. Worth revisiting occasionally.

Regulation where I live. Network and security developments. Changes to token supply. Whether it is actually being adopted. Whether my original reason for buying still holds. The hardest one to answer honestly when the price has risen.

Print this checklist How buying actually works

Disclaimer

This cheat sheet is for education and general information only.
It is not financial, investment, tax or legal advice, and it is not a recommendation to buy, sell or hold anything, or to use any particular service.
Working through this list does not make an investment safe or suitable. It is a prompt to think, nothing more.
The opinions expressed here are my own and do not reflect the views of my employers or the companies I am involved with.
Always seek the advice of qualified professionals with any questions you may have regarding any information presented here.
I make no representations as to the accuracy, completeness or validity of any information on this site, and will not be liable for any errors, omissions, or any losses, injuries or damages arising from its display or use.